·The APAC region is expected to continue to be the fastest-growing region of the world economy in 2017.

·The risk of a China hard landing in the next 2 or 3 years remains a key risk scenario, with the rest of the APAC region particularly vulnerable to such a shock.

·Further US Fed rate hikes in 2017 may cause some turbulence in global financial markets and result in the US dollar appreciating further against many Asian currencies.

·The risk of rising trade tensions between the US and China is another key risk to the near-term outlook.

·A number of regional initiatives are expected to provide positive economic dynamics for the region over the medium-term, including China’s ‘One Belt One Road’ initiative, as well as the creation of the AIIB and Silk Road Fund.

Key Data Points:

·APAC GDP growth is forecast to be 4.6% in 2017, similar to the 4.7% growth rate estimated for 2016.

·The pace of economic growth in China is forecast to moderate from 6.7% in 2016 to 6.4% in 2017, as the manufacturing sector continues to undergo considerable restructuring and reform, while residential construction could experience another slowdown.

·Japan is forecast to grow at a lackluster pace of around 1% in 2017, similar to 2016, as factors such as demographic ageing and the high level of government debt continue to be a drag on Japan’s potential growth rate.

·Indian GDP growth is expected to show a moderate improvement from 6.9% in 2016 to 7.4% in 2017, despite its demonetization exercise in November.

·Growth momentum in the Southeast Asian region is expected to remain strong, with ASEAN’s largest economy, Indonesia, forecast to grow at a pace of around 5.1% in 2017 after an estimated 5.0% growth rate in 2016.

·With more US Fed rate hikes expected in 2017, this is expected to support the further appreciation of the USD against many Asian currencies. The yuan is expected to gradually fall further against the USD, reaching 7.35 against the USD by the end of 2017.